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Ruby Tuesday, Inc. Message Board

  • superscenario superscenario May 4, 2012 11:33 AM Flag

    RTI/ATI Q1 Tidbits

    Tonnage: ATI’s titanium tonnage increased 4% over Q1 of 2011 to 3,194 tons; RTI’s tonnage increased 29% to 1,955 tons. ATI’s tonnage increased 24% sequentially from Q4, while RTI’s tonnage increased 8% from Q4.

    Average Prices: ATI’s Q1 prices were up 3% from Q1 of 2011, and down 8% sequentially from Q4, with the decline from Q4 perhaps (my guess) reflecting recent scrap price declines. (My comment: ATI’s pricing is heavily formula-based, with scrap being the largest determinant of such formula price changes.) RTI’s average prices were down 3% from Q1 of 2011, and up 1.6% from Q4. RTI has very little “spot” business, with the preponderance of its sales are covered by long term contracts, and RTI’s pricing also has significant lags to current market conditions because of RTI’s heavy remanufacturing mix (long inventory cycle).

    ATI said its new Rawley, UT sponge plant (24 Million pound potential annual capacity, with room to expand from that) has become qualified for aero applications, but that it will be about another two years (hopefully) before the sponge plant becomes qualified for engine “rotating” apps. ATI said its Albany, OR sponge plant [mothballed back around 2009] can be restarted with about $5 Million of capex.

    Following are key comments from RTI’s conference call yesterday:

    The main factor in RTI’s increased tonnage in 2012 is higher shipments to Airbus. Q1 spot sales were about “even” with last year.

    RTI reiterated its tonnage outlook for 2012, with a slight firming of the tonnage forecast to 16 Million pounds, up a tad from last quarter’s con call forecast of 15 ½ to 16 Million pounds. With Q1 shipments of 4.3 Million pounds, the 16 Million forecast for the full year did not sound particularly bullish.

    RTI said, reflecting its long-term contracts, its average pricing would be down in 2012. Pricing in the spot market is soft because “volume is not strong” in the market. Scrap prices are “flat to down.” [the trend since Q3 of 2010].
    RTI acknowledged the risk of possible Congressional cutbacks to the F-35 program, for which RTI is the principal titanium supplier.

    RTI said it has 35% market share with Airbus. This conflicts with its statement about a year ago when it said it had about a 20% share of certain items. [VSMPO supplies most of Airbus’ titanium]

    2012 Sponge cost increases fully hit RTI’s Q1 costs, so there should be no further cost pressures in succeeding Quarters. [I find it surpricing that there was no lower-cost sponge inventory carried over from 2011 - - but that’s what they said.]

    Sponge costs for 2013 are not yet forecastable; there should be some favorable news on some of the sponge sourcing [presumably formula-driven pricing reflecting lower scrap costs], but the majority of RTI’s sponge is sourced with annually “renegotiated” rather than formula-driven pricing.

 
RT
6.31Aug 27 4:00 PMEDT

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